The Russian ruble (RUB) is the official currency of Russia and the two partially recognized republics of Abkhazia and South Ossetia. Formerly, the ruble was also the currency of the Russian Empire and the Soviet Union prior to their dissolution.


The ruble was introduced in the 14th century and started gaining prominence after Ivan III of Russia laid siege to Novgorod, integrating the city into the growing Russian empire. It replaced other currencies like Grivna and Kuna and became the sole currency of Russia.

Over the centuries, the ruble has weathered numerous financial crises, wars, political turmoil and hyperinflation. Despite the challenges, it has shown resilience and remains an important global currency today.

With Russia being the largest country in the world by land area, the ruble is used across 11 time zones. It’s the second most used currency in the post-Soviet states after the Kazakhstani tenge. The Central Bank of Russia has the exclusive right to issue the currency and manages its supply and value.

In this comprehensive guide, we’ll cover the history, exchange rates, economic role and future outlook of the Russian ruble.

History of the Ruble

Origins and Adoption

The first known currency on the territories that would later constitute Russia were Grivnas issued by the Kievan Rus in the 11th century. As the state fragmented and local princes grew in power, several currencies came into circulation.

The modern ruble is widely considered to have originated from a foreign coin that became known locally as “ruble.” There are many theories about the coin’s exact origins, from the rial of the Persian Empire to the Rheingulden of the Holy Roman Empire. The latter is considered the most likely source due to extensive trade links.

As Moscow rose to prominence in the 13th-14th centuries, its princes strived to standardize coinage across the land. This led Prince Ivan I to introduce a unified silver coinage called the ruble around 1360. The earliest ruble coins were minted in Novgorod the Great.

Over the centuries, the ruble became the dominant currency across the Tsardom of Russia and later the Russian Empire. It replaced regional currencies like Novgorod’s Denga and Moscow’s Kopek. The first paper rubles were issued in 1769 during the reign of Catherine the Great.

The Ruble in the 20th Century

In the early 20th century, the ruble was backed by gold under the reigns of the last two Russian emperors – Alexander III and Nicholas II. This ended after the empire’s collapse in 1917. As inflation kicked in, the Soviet government introduced State Treasury notes, which effectively became the currency.

A massive redenomination took place in 1922 with the introduction of the first Soviet rubles. This was due to rampant hyperinflation that had made the old rubles practically worthless. The revalued currency held stable for over a decade known as the “Stalin ruble.”

In the World War 2 years, the occupying Nazi Germany printed occupation rubles for the territories under its control. This led to an influx of counterfeit banknotes and economic instability. In 1947, another redenomination took place with 1 new ruble equivalent to 50,000 pre-war rubles.

The ruble remained the Soviet Union’s only currency until its dissolution in 1991.

Financial Crises in Modern Russia

After the USSR’s dissolution, the ruble remained the national currency of the newly-formed Russian Federation.

In the 1990s, Boris Yeltsin’s economic reforms led to massive inflation and a devaluation of the ruble. This culminated in the 1998 Russian financial crisis, where the ruble lost over 60% of its value and Russia defaulted on domestic debt. A new redenomination took place in 1998 to stabilize the currency.

When President Putin took over, the ruble initially grew stronger due to rising oil prices. But the 2008 global financial crisis led to another plunge. The Central Bank introduced a managed float exchange rate to reduce volatility.

The ruble faced its biggest drop in recent history in 2014 following a crash in oil prices and sanctions due to the Crimea crisis. It lost over 50% of its value against the US dollar. The Central Bank hiked interest rates to 17% to curb the losses. It has since rebounded though the current economic sanctions continue to weaken it.

Coins and Banknotes

The modern ruble is divided into 100 kopeks. It is issued by the Central Bank of Russia in both coins and banknotes. The coins come in denominations of 1, 5, 10 and 50 kopeks along with 1, 2, 5 and 10 rubles.

The current series of banknotes was introduced in 1997 and consists of notes in values of 5, 10, 50, 100, 500, 1000 and 5000 rubles. They measure 150 × 65 mm in size.

All Russian coins and banknotes carry the double headed eagle from the Russian coat of arms along with indicative numbers, letters and symbols. They have multiple security features to prevent counterfeiting. These include watermarks, security threads, UV ink and holograms.

Exchange Rate History

As with most free-floating currencies, the exchange rate of the ruble has seen frequent fluctuations through history due to economic factors and geopolitical events.

Here is a quick overview of the key developments:

  • In the early 90s, the ruble was pegged at a highly overvalued level due to tight government control. This led to widespread black market trading. The rate was allowed to float around 1995.
  • During the 1998 financial crisis, the rate plunged from 6 rubles to 1 USD to around 21. This promoted the debt default and a rush towards dollarization.
  • Thanks to increasing oil revenues, the ruble slowly strengthened in the 2000s, reaching a rate of 23 rubles to $1 in 2008.
  • The 2008 crisis caused it to plunge again to 36 per dollar. After a few years of recovery, it hovered around 30.
  • In 2014, the crash in oil prices and Western sanctions due to the Crimean crisis triggered the worst drop, with the ruble losing over 50% of its value. It went from 32 per dollar to around 80 within a few months.
  • The Central Bank fixed the exchange rate for a period to control the volatility. Since then, it has stabilized to some extent, currently trading between 60-70 per USD.

Role in the Russian Economy

As the national currency, the ruble plays an important role in Russia’s $1.5 trillion economy:

  • Medium of exchange – It facilitates sale and purchase of goods and services across the vast geography of Russia and in international trade. Most prices are quoted in rubles.
  • Unit of account – As the standard monetary unit, it is used to measure and state prices, costs, debts etc in the economy. Financial accounting is done in rubles.
  • Store of value – Ruble cash, deposits etc allow Russians to store value though high inflation has often reduced this functioning.
  • Macroeconomic indicator – Its exchange rate and forex reserves help assess the economic health and global status of Russia.
  • Pride and identity – Having a strong national currency is associated with sovereignty and seen as a matter of pride and national identity.

However, the dollar and euro play major roles for certain functions:

  • High-value real estate transactions often take place in dollars. Sellers prefer the stability.
  • Euros and dollars are preferred for savings due to the ruble’s high inflation. Nearly $200 billion is estimated stored under mattresses.
  • Russia’s large foreign reserves are held majorly in dollars as well as euros and British pounds.
  • Oil and gas exports account for a large part of Russia’s forex earnings. They are priced and settled in dollars.

Monetary Policy

Monetary policy involves management of money supply and interest rates by a nation’s central bank to achieve macroeconomic objectives like inflation control, currency stability and economic growth.

For the ruble, monetary policy is determined and implemented by the Central Bank of Russia (CBR) headquartered in Moscow. It has several tools:

1. Interest Rates – The CBR benchmark one-week repo rate directly affects ruble lending rates. Cutting rates boosts business activity but risks inflation, while hiking slows the economy and defends the ruble’s value.

2. Reserve Requirements – Higher reserve ratios reduce the loanable funds commercial banks have available, tightening money supply. The CBR presently requires reserves of 4.25%.

3. Open Market Operations – The CBR routinely buys or sells government bonds to respectively increase or decrease base money supply.

4. Currency Intervention – The bank can directly buy or sell rubles on forex markets to influence exchange rates. But it generally allows free float.

The CBR focuses on controlling inflation, which has often run high, while supporting economic growth and employment. It aims to balance multiple objectives through its policies.

Financial Markets

The Moscow Exchange (MOEX) is Russia’s main securities exchange for trading in stocks, bonds, derivatives and currencies.

For ruble trading, key elements are:

  • Spot market – The ruble is freely traded around the clock against major currencies like the dollar and euro in spot transactions for immediate delivery. Over $1 billion worth of spot trades take place daily.
  • Futures and forwards – Derivative contracts allowing buyers and sellers to lock in ruble exchange rates for future transactions are also popular on the MOEX.
  • Swaps – Banks undertake currency swaps allowing firms to access foreign currency loans at lower costs amidst sanctions. Cross-currency swaps help banks refinance foreign debts.
  • Interbank lending – Domestic and overseas banks lend funds in rubles and other currencies between themselves for short periods. Rates reflect monetary policy and exchange rate outlooks.
  • Central bank operations – The CBR conducts repo and deposit auctions, sells bonds, and intervenes in currency markets to regulate banking liquidity and the forex value of the ruble.

Inflation and Purchasing Power

Inflation refers to the rate of increase in price levels. High inflation reduces the purchasing power of a currency.

The ruble has faced extended episodes of hyperinflation at several points in history which severely eroded its value. These include:

  • Early 1920s – Post Russian civil war, prices doubled every few days, peaking at 1921 monthly inflation of 213%. It led to the currency overhaul.
  • Early 1990s – The transition from the Soviet Union to capitalist markets was messy. Inflation went from 5% to an annual peak of 2500% in 1993 as the economy contracted. Savings evaporated.
  • 1998 crisis – The ruble lost two-thirds of value in a few weeks, driving monthly inflation over 80%. The standard of living plunged.
  • 2014-15 crash – Sanctions and cheap oil caused the huge drop. Inflation spiked to 17% before countermeasures worked. Import costs skyrocketed.
  • COVID pandemic – Disruptions and rising commodity prices stoked inflation to 17.8% in 2022 prompting interest rate hikes.

However, inflation has moderated during more stable periods, aided by prudent fiscal and monetary policies. The CBR presently targets 4% inflation. Improved macroeconomic management makes repeats of hyperinflation less likely.

Outlook and Forecasts

The ruble outlook going forward looks extremely uncertain due to the Ukraine conflict. Here are the key factors that may influence its future trajectory:

  • Geopolitical developments – Progress or escalation in the war with associated sanctions will strongly sway the currency. A peace deal and lifting of sanctions can boost it.
  • Oil and gas markets – Energy exports are key for Russia. Higher prices improve the currency, while a global demand slump or supply disruptions weaken it. EU import bans are concerning.
  • Economic downturn – The Sberbank expects the Russian GDP to contract by 4-6% in 2022 amidst closed factories, supply chain issues and declining investment. A severe recession hurts the ruble.
  • Central bank policies – Aggressive key rate hikes from the CBR despite downturn risks have supported the currency’s exchange value so far. Changes in stance may impact it.
  • Dollar dependency – As long as Russia remains dependent on imported technology and exports primary commodities, the ruble tends to follow the dollar’s trajectory.
  • Diplomatic realignment – A pivot from Europe to China and India offers new opportunities. But overdependence on fewer allies poses risks longer-term.
  • Capital controls – Tighter currency regulations may boost the official rate but widen the gap with the informal market. The latter reflects true value.

In conclusion, while the ruble has shown its characteristic resilience thus far, the road ahead has multiple hazards. Agility and adaptation will be critical for the currency as Russia copes with tectonic geopolitical shifts.